Personal Income Drops In February

Fri, 26 March 2021  |  economy 

Personal income dropped and disposable personal income fell in February after double digit gains the previous month. Real DPI decreased 8.2 percent in February and Real PCE decreased 1.2 percent; goods decreased 3.3 percent and services decreased 0.1 percent (tables 5 and 7). The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent (table 9).

COVID-19 Impact on February 2021 Personal Income and Outlays

The estimate for February personal income and outlays was impacted by the continued government response to COVID-19. Economic impact payments associated with the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021 (which was enacted on December 27, 2020) declined sharply in February and unemployment benefits continued, but at a lower level. Additionally, restrictions and closures continued in some areas of the United States. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see “Effects of Selected Federal Pandemic Response Programs on Personal Income.”

The decrease in personal income in February was more than accounted for by a decrease in government social benefits to persons. Within government social benefits, “other” social benefits, specifically the economic impact payments to households, decreased. The CRRSA Act authorized a round of direct economic impact payments that were mostly distributed in January (table 3).

The $149.0 billion decrease in current dollar PCE in February reflected a decrease of $155.9 billion in spending for goods and a $7.0 billion increase in spending for services (table 3). Within goods, the decreases were widespread across most categories, led by “other” nondurable goods (mainly pharmaceutical products and recreational items). Partly offsetting these decreases was an increase in gasoline and other energy goods. The increase in services primarily reflected increases in housing and utilities and in health care (mainly hospitals) that were partly offset by a decrease in spending for food services. Detailed information on monthly PCE spending can be found in Table 2.3.5U.

Personal outlays decreased $141.5 billion in February (table 3). Personal saving was $2.41 trillion in February and the personal saving rate—personal saving as a percentage of disposable personal income—was 13.6 percent (table 1).

Updates to Personal Income and Outlays

Estimates have been updated for October through January. Revised and previously published changes from the preceding month for current-dollar personal income, and for current-dollar and chained (2012) dollar DPI and PCE, are shown below.

Source: BEA